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ED seizes ₹5,551 cr from Chinese smartphone giant Xiaomi accounts under FEMA

By Priyanka Verma 
Updated Date

New Delhi: The Enforcement Directorate on Saturday said it had seized ₹5,551.27 crore belonging to Xiaomi Technology India Pvt Ltd – a ‘wholly-owned subsidiary of China-based Xiaomi group’ – lying under provisions of the Foreign Exchange Management Act of 1999.

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The action has been taken against Xiaomi Technology India Private Limited. The company (also called Xiaomi India) is a trader and distributor of mobile phones in the country under the brand name of MI.

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“Xiaomi India is a wholly-owned subsidiary of China-based Xiaomi group. This amount of ₹5,551.27 crore lying in the bank accounts of the company has been seized by the Enforcement Directorate,” the agency said in a statement.

The seizure of funds has been done under relevant sections of the Foreign Exchange Management Act (FEMA) after a probe was launched by the federal agency against the company in connection with alleged “illegal remittances” sent abroad by the Chinese firm in February.

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“The company has remitted foreign currency equivalent to ₹5,551.27 crore to three foreign based entities, which include one Xiaomi group entity, in the guise of royalty,” the ED said. Such huge amounts in the name of royalties were remitted on instructions of Chinese “parent group” entities, the ED has alleged.

The ED has claimed Xiaomi India gets fully built mobile sets and other products from manufacturers in India, but had not availed any service from the three foreign-based entities to whom such amounts have been transferred.

“Under the cover of various unrelated documentary façade created amongst the group entities, the company remitted this amount in guise of royalty abroad which constitute violation of section 4 of the FEMA,” the agency said.

Xiamoi has also been accused of providing “misleading information” to the banks while remitting the money abroad.

Earlier this month, the ED had also questioned the global vice president of the group, Manu Kumar Jain, at the agency’s regional office in Bengaluru, Karnataka.

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